Will Potential Laws Change the Tax Implications of Cryptocurrency?

In the past few years, increase in the use of cryptocurrency has skyrocketed. Last November, the issuance of digital assets from private entities reached a market capitalization of $3 trillion. Just five years earlier, that capitalization was $14 billion.

All this activity has led to questions about the tax treatment of these digital assets. For tax purposes, you should know, virtual currencies are treated as property. And while this generic rule tries to simplify the matter, it fails to answer potential issues. For instance, what are the tax consequences of earning passive income through trading cryptocurrency? How are taxpayers treated when one uses cryptocurrency to buy non-fungible tokens on the blockchain? 

Cryptocurrency experts believe America’s digital asset sector needs more regulation to protect the economy and investors. On March 9, President Biden took steps to do just that, signing an executive order to better regulate virtual currency. The order expects the Treasury Department and other government agencies to publish digital asset reports that prioritize the effects digital assets have on the U.S. financial system and economy. Additionally, the Infrastructure Investment and Jobs Act will require the issuance of Forms 1099-B to detail cryptocurrency exchanges. Plus, the Treasury Department’s 2023 revenue proposals want to require certain taxpayers to report foreign digital asset accounts in order to avoid tax evasion. 

Clearly, with the matter in a state of constant flux, staying educated on current tax news regarding cryptocurrency will help prepare taxpayers for this and upcoming tax seasons.

About Schneider Downs Tax Services

Schneider Downs’ tax advisors have experience and expertise in a wide range of industries including Automotive, Construction, Real Estate, Manufacturing, Energy & Resources, Higher Education, Not-for-profits, Transportation and others. Our industry knowledge and focus ensures the delivery of technical tax strategies which can be implemented as practical business initiatives. To learn more visit our dedicated Tax Services page. 

You’ve heard our thoughts… We’d like to hear yours

The Schneider Downs Our Thoughts On blog exists to create a dialogue on issues that are important to organizations and individuals. While we enjoy sharing our ideas and insights, we’re especially interested in what you may have to say. If you have a question or a comment about this article – or any article from the Our Thoughts On blog – we hope you’ll share it with us. After all, a dialogue is an exchange of ideas, and we’d like to hear from you. Email us at [email protected].

Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax, or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice.

© 2023 Schneider Downs. All rights-reserved. All content on this site is property of Schneider Downs unless otherwise noted and should not be used without written permission.

our thoughts on
The Fiscal Responsibility Act of 2023 – What Might be the Impact on 2023 Tax Legislation?
What's Next: A Universal Charitable Deduction?
State Tax Considerations in a Remote Environment
UPDATE: Inflation Reduction Act – Final Senate Version Eliminates the Change in Carried Interest Rules
Inflation Reduction Act – Tax Provisions Included in Proposed Legislation
Changes to R&D Expense Rules Affecting Manufacturers
Register to receive our weekly newsletter with our most recent columns and insights.
Have a question? Ask us!

We’d love to hear from you. Drop us a note, and we’ll respond to you as quickly as possible.

Ask us
contact us
Pittsburgh

This site uses cookies to ensure that we give you the best user experience. Cookies assist in navigation, analyzing traffic and in our marketing efforts as described in our Privacy Policy.

×